Yes I know two blog entries this week. I was inspired this week to also speak a little about construction financing.
Your lending options can vary from conventional banks, virtual lenders, pension or trust funds, and private lenders. The cost of borrowing or rate varies from approximately 3% to 15% depending on the overall project.
Anyone that will finance your project will want to see project plan, architectural rendering, budget (land and construction costs), timeline, and market evaluation. Structuring and planning all this is critical and can be time or cost consuming if not planned out properly. I've seen a few projects that imploded because planning wasn't properly thought out in advance.
In one particular instance, a client met with me too late for me to help. The gentleman started building his home in a remote location without setting up mortgage financing in advance. When I met with him he reach past a point of no return with all banks and lenders. The house was 80% completed and he ran out of money. Furthermore, his credit was weak which didn't help matters.
On a larger scale, I worked with a client who wanted to build a condo project south of Montreal. He had bought the land, had a construction plan and budget, permits were on their way, he had 25% cash to work with and equity in other properties. Here I worked with a private lender to finance the construction and once the condos would be built and sold then the private loan would be repaid.
If you'd like to share your good and not so good mortgage or real estate moments let me know by phone or email. Have a good week everyone.
In one particular instance, a client met with me too late for me to help. The gentleman started building his home in a remote location without setting up mortgage financing in advance. When I met with him he reach past a point of no return with all banks and lenders. The house was 80% completed and he ran out of money. Furthermore, his credit was weak which didn't help matters.
On a larger scale, I worked with a client who wanted to build a condo project south of Montreal. He had bought the land, had a construction plan and budget, permits were on their way, he had 25% cash to work with and equity in other properties. Here I worked with a private lender to finance the construction and once the condos would be built and sold then the private loan would be repaid.
If you'd like to share your good and not so good mortgage or real estate moments let me know by phone or email. Have a good week everyone.
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